German Discounters Hit U.K. Milestone With 10% Grocery Share

Discount Grocers Aldi And Lidl As U.K.'s

A Lidl store in Catford, U.K.

Photographer: Simon Dawson/Bloomberg
  • Asda's sales slump as Wal-Mart unit commits to more price cuts
  • Leader Tesco cedes more shoppers as sales drop accelerates

German discounters Aldi and Lidl attained a landmark in their invasion of the U.K. grocery market, reaching a combined 10 percent share as sales slump at supermarkets including Wal-Mart Stores Inc.’s Asda.

Data from researcher Kantar Worldpanel showed that the budget chains have doubled their share in little more than three years, with Lidl making particularly strong progress in recent weeks. Asda’s third-quarter same-store revenue fell 4.5 percent, the company said Tuesday, committing to additional price cuts in an effort to regain shoppers from the discounters.

Aldi and Lidl have added a million shoppers in the last year, Fraser McKevitt, Kantar Worldpanel’s head of retail and consumer insight, said in a statement. Last week, Lidl unveiled a more spacious store layout and a 1.5 billion-pound ($2.3 billion) investment plan to gain even more customers. Asda Chief Executive Officer Andy Clarke said he expects difficult conditions to persist into 2016.

“We will continue price cuts at a similar pace or potentially even more aggressively,” Clarke said at a press conference in London. Asda plans to cut prices by more than the 1 billion pounds over five years that it committed to in 2013, he said. More than half of that amount has already been achieved.

Lidl’s sales growth accelerated to 19 percent in the 12 weeks to Nov. 8, giving the company a record market share of 4.4 percent, Kantar said. Aldi’s sales rose 17 percent, meaning its slice of spending was unchanged from the previous month at 5.6 percent.

“With plans to open hundreds of stores between them, they’ll noticeably widen their reach to the British population,” McKevitt said of Aldi and Lidl.

Asda Overtaken

Kantar’s research showed that Britons are spending more each time they visit a discounter than they do elsewhere. The average spend per visit to an Aldi or Lidl store rose by 4 percent from a year earlier to 18.85 pounds. That’s 78 pence above the industry average, Kantar said.

Asda fell behind J Sainsbury Plc in Kantar’s rankings, with its competitor now the U.K.’s second-biggest grocer by market share behind Tesco Plc. Asda’s market share slipped to 16.4 percent, while Sainsbury’s rose by 0.2 percentage point from a year earlier to 16.6 percent. That was the first increase of any of the U.K.’s four main supermarkets since October 2014.

Sainsbury shares gained as much as 3.6 percent in London after tumbling last week when the company said the U.K.’s main supermarkets will need to cut prices further. Revenue rose 1.5 percent in the last 12 weeks, Kantar said.

Tesco’s performance worsened, with 12-week sales dropping 2.5 percent. Sales at Wm Morrison Supermarkets Plc dropped 1.7 percent, Kantar said.

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